Why A Sirius (SIRI) Chapter 11 Does Not Matter

It does not matter if Sirius (SIRI) goes bankrupt now. Creditors and bondholders may care. It probably will not be noticed by customers. In that way, it will be like an airline bankruptcy.

And, rumors are that the satellite radio company will file Chapter 11 this week, perhaps falling into the hands of satellite TV firm EchoStar (DISH)

After the rumors of a bankruptcy hit the market last night, Sirius shares dropped to under $.07. That means that the market cap of the entire company is only about $200 million. Eight years ago, the stock was over $50, so its valuation was about what Apple’s (AAPL) is now.

The Sirius managment is putting up a fierce fight for the company to stay independent, but a look at the company’s balance sheet shows that the fight was over a long time ago, The Sirius debt is over $2 billion and, in the current credit markets, there is absolutely no chance that any part of that can be refinanced. The creditors have effectively owned the company for months.

Given what a high flier the company was just a few years ago, a Sirius bankruptcy will be a spectacular media event. But, from a financial standpoint, it is old news.